Cook v. City of Binghamton

• Decision Date: 15 November 1979
• Citation: 48 N.Y.2d 323,422 N.Y.S.2d 919,398 N.E.2d 525
• Parties: , 398 N.E.2d 525 Frederick W. COOK et al., Appellants, v. CITY OF BINGHAMTON et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 919

422 N.Y.S.2d 919

48 N.Y.2d 323, 398 N.E.2d 525

Frederick W. COOK et al., Appellants, v. CITY OF BINGHAMTON et al., Respondents.

Court of Appeals of New York.

Nov. 15, 1979.

Walter J. Relihan, Jr., Binghamton, for appellants.

John W. Park, Corp. Counsel, Binghamton (Kenneth Auerbach, Binghamton, of counsel), for City of Binghamton, respondent.

Kenneth P. Helisek, Village Atty., Johnson City, for Village of Johnson City, respondent.

Robert Abrams, Atty. Gen. (Lew A. Millenbach and Shirley Adelson Siegel, Asst. Attys. Gen., of counsel), for State respondents.

Rodney A. Richards, Endicott, for Village of Endicott, respondent.

OPINION OF THE COURT

WACHTLER, Judge.

The issue on this appeal is whether chapter 965 of the Laws of 1977 which diminished the statutory disability benefits for regularly employed firemen worked an impairment of rights guaranteed by the contract clause of the Federal Constitution, or by section 7 of article V of the State Constitution. The Appellate Division found that it did not.

The plaintiffs are paid firemen of the City of Binghamton and the Villages of Endicott and Johnson City. All were disabled by illness or injury incurred in the line of duty. Prior to the effective date of chapter 965 each plaintiff was receiving his full salary and medical expenses pursuant to former section 207-a of the General Municipal Law, which provided, in part, that a paid fireman, other than those of the City of New York, if injured in the performance of his duties, "shall be paid by the municipality or fire district by which he is employed the full amount of his regular salary or wages until his disability arising therefrom has ceased".

When it enacted chapter 965 the Legislature had before it information indicating that payments required by section 207-a of the General Municipal Law substantially decreased the financial ability of municipalities to retain the services of a full complement of firefighters, and that the apparent inequity of permitting disabled men to work at jobs in the private sector while receiving full salary might depress the morale of able-bodied firefighters still in service.

As previously noted, chapter 965 worked substantial changes in the operation of section 207-a of the General Municipal Law. ^* It provided: First, that the payment of full salary and benefits to a disabled fireman shall not continue beyond "such time as he shall have attained the mandatory service retirement age applicable to him or shall have attained the age or performed the period of service specified by applicable law for the termination of his service"; Second, that if a fireman disabled in the performance of his duties is granted an accidental disability retirement pursuant to section 363 of the Retirement and Social Security Law or its equivalent, the municipality shall pay him the difference between the pension allowance and his full salary, but only until the time at which he may be involuntarily retired, and if the disabled fireman refuses to apply for an accidental disability retirement, the municipality may apply for him; Third, that a disabled fireman who is not granted an accidental disability retirement may be required to perform light duty as a fireman, or where consistent with civil service requirements and the fireman consents, may be transferred to another municipal department; and Fourth, that if a disabled fireman takes outside employment, he forfeits any benefits under section 207-a.

Plaintiffs argue that the application of the provisions of chapter 965 to them unconstitutionally impairs the obligation of contracts in violation of section 10 of article I of the United States Constitution.

We note at the outset that there is not present here the circumstance of a contract-in-fact bargained for by the parties and couched in contractual terms, such as in Patterson v. Carey, 41 N.Y.2d 714, 395 N.Y.S.2d 411, 363 N.E.2d 1146 or in United States Trust Co. v. New Jersey, 431 U.S. 1, 97 S.Ct. 1505, 52 L.Ed.2d 92, both involving covenants with the holders of bonds issued by public authorities. As in most cases involving the contract clause, the essential question is the existence of a contractual relation. We begin our analysis with the observation that "(t)he principal function of a legislative body is not to make contracts but to make laws which declare the policy of the state and are subject to repeal when a subsequent Legislature shall determine to alter that policy. Nevertheless, it is established that a legislative enactment may contain provisions which, when accepted as the basis of action by individuals, become contracts between them and the State or its subdivisions with the protection of article I, § 10." (Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 100, 58 S.Ct. 443, 446, 82 L.Ed. 685.)

In considering whether a State statute impairs the obligation of a contract, "the existence of the contract and the nature and extent of its obligation become federal questions" (Irving Trust Co. v. Day, 314 U.S. 556, 561, 62 S.Ct. 398, 401, 86 L.Ed. 452) which are to be determined by "an appraisal of the statutes of the State and the decisions of its courts" (Indiana, supra, 303 U.S. at p. 100, 58 S.Ct. at p. 446). The burden of showing the unconstitutionality of a statute, of course, rests on the party which attacks its validity (Matter of Van Berkel v. Power, 16 N.Y.2d 37, 40, 261 N.Y.S.2d 876, 878, 209 N.E.2d 539, 540) and every legislative enactment carries a strong presumption of constitutionality (Borden's Co. v. Baldwin, 293 U.S. 194, 209, 55 S.Ct. 187, 79 L.Ed. 281; Paterson v. University of State of N. Y., 14 N.Y.2d 432, 438, 252 N.Y.S.2d 452, 455, 201 N.E.2d 27, 30).

Generally, a statute will itself be treated as a contract when its language and the circumstances manifest a legislative intent to create private rights of a contractual nature enforceable against the State. In Indiana (supra) for example, the statute in question employed the term "contract" a total of 25 times, defining the relation of teachers to the school district and stating the conditions for a teacher's termination. Moreover, "(t)he tenor of the act indicates that the word 'contract' was not used inadvertently or in other than its usual legal meaning" and prior decisions of the State's highest court interpreting that statute had uniformly held the rights created pursuant to it to be contractual in nature (Indiana, supra, 303 U.S. at p. 105, 58 S.Ct. at p. 448). Under those circumstances, the United States Supreme Court found that the obligation fell within the ambit of section 10 of article I.

On the other hand, certain types of legislative acts, including those fixing salaries and compensation, or setting the term and tenure of public officers, are not presumed to create a contract: "The presumption is that such a law is not intended to create private contractual or vested rights, but merely declares a policy to be pursued until the Legislature shall ordain otherwise. * * * If, upon a construction of the statute, it is found that the payments are gratuities, involving no agreement of the parties, the grant of them creates no vested right" (Dodge v. Board of Educ., 302 U.S. 74, 79, 58 S.Ct. 98, 100, 82 L.Ed. 57).

In the case at bar the statute in contention contains no words of contract, as in Indiana (supra). There is no hint in its terms that the consent or agreement of any person is required for the statute to have its intended effect. On the contrary, it expresses a public policy as determined by the Legislature. Further, the matters addressed by the statute, i. e., payment of "regular salary or wages" for the period "until his disability * * * has ceased", both of which are terms and conditions of employment, are indisputably among those classes of legislative acts long presumed to create no private contractual rights.

It is apparent then, that if an enforceable contract right is to be generated by the statute, it must be sought in the holdings of this court. However, an examination of the cases cited by the plaintiffs for the proposition that a consummated unilateral...